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Question : A person took a loan at 5% per annum simple interest during the first year and with an increase of 0.5% simple interest every year from the second year onwards. After 4 years, he paid INR 4,600 as a total interest to settle the loan completely. How much was the loan?

Option 1: INR 20,000

Option 2: INR 19,000

Option 3: INR 18,000

Option 4: INR 21,000


Team Careers360 13th Jan, 2024
Answer (1)
Team Careers360 19th Jan, 2024

Correct Answer: INR 20,000


Solution : Given:
The loan is given at 5% per annum simple interest during the first year and with an increase of 0.5% simple interest every year from the second year onwards.
Time = 4 years
Let the loan amount be $x$.
Total interest earned = 5 + 5.5 + 6 + 6.5 = 23%
According to the question,
23% of $x$ = 4600
⇒ $x = \frac{4600×100}{23}=20000$
So, the loan amount was INR 20,000.
Hence, the correct answer is INR 20,000.

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